Gold and Platinum are Giving the All Clear to the Stock Market Investors

CHAPEL HILL, N.C. (MarketWatch) — Odds are favorable that the stock market will rise in the next year.

That good news comes from an unlikely source: the precious metals market. That’s because gold, even though it has struggled of late, has nevertheless been stronger than platinum. As a result, the gold-platinum ratio — which historically has been an excellent stock market indicator — remains close to a 10-year high. (Please see chart, above.)

It was a year ago when I first reported on this ratio and the academic study documenting its impressive performance. The indicator was bullish then, and, as predicted, the S&P 500 Index SPX, +0.66% today is higher — 12% higher, in fact.

Believe it or not, the gold-platinum ratio today is just as bullish as it was last summer. If anything, it’s even more bullish: The ratio is 9% higher.